Problems With Hypothesizing Reasonable Royalty Negotiation

Law360, New York (January 7, 2014, 12:41 PM EST) -- ​Reasonable royalty damages are the predominant form of relief awarded in patent infringement cases. Of late, they have been a lightning rod for assertions that the patent protection system is out of control.

The primary tool used to assess such damages is the hypothetical negotiation. The construct provides that a reasonable royalty should be determined by hypothesizing an imaginary negotiation between a patent holder and an infringer over the use of a patented invention at the time of first infringement. Use of this construct has become...